Interim Results 2020 Presentation 18 August 2020 Strictly Private and Confidential
Disclaimer This announcement contains certain forward-looking statements with respect to the financial condition, results or operation and businesses of Network International Holdings plc. Such statements and forecasts by their nature involve risks and uncertainty because they relate to future events and circumstances. There are a number of other factors that may cause actual results, performance or achievements, or industry results, to be materially different from those projected in the forward-looking statements. These factors include general economic and business conditions; changes in technology; timing or delay in signing, commencement, implementation and performance of programmes, or the delivery of products or services under them; industry; relationships with customers; competition; and ability to attract personnel. You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. We undertake no obligation to update or revise any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances. 2
Strategic Update Simon Haslam, CEO 3
Fundamentals and business drivers remain strong, although near term performance impacted by Covid-19 Underlying EBITDA 1 Underlying EPS 1 Liquidity & leverage 1 Revenues USD134. D134.2m 2m USD52. D52.7m 7m USD295m D295m USD4. D4.3 3 cen ents ts (11.9)% YoY (31.0)% YoY +(51.1)% YoY 2.0x ND: u.EBITDA Seeing improved trading trends in July for both Merchant and Issuer Solutions, 2020 outlook reiterated Pace of POS merchant signings back to pre Covid levels and online gateway signings remain high Evidence of shift away from cash: increase in contactless Tx, and use of cards in traditionally cash merchants DPO acquisition presents compelling strategic and growth opportunity; completion expected end 2020 Not otes: 1 1. For definitions of Alternative Performance Measures and Key Performance Indicators, see pages 27-28 4
Delivering on our strategic priorities Progress • Capitalising on digital payments adoption and supporting financial inclusion • Pursuing opportunities for acceleration: new markets (Saudi); acquisitions (DPO); potential large scale outsourcing • Expanding customer base and focusing on high value segments • Expanding product range and market penetration OUR STRATEGY Providing solutions that • Leveraging technology and building capabilities allow our customers to bring digital payments to more consumers • Developing commercial arrangements with strategic partners 5
Early evidence of an acceleration from cash to card payments Mix of payment transactions on cards hosted by Network in the UAE, where card holders across all segments are showing increased adoption of digital payments June 2020: Change in behaviour by the same segments of cardholders. Those who mainly Jan 2020: Cardholders split by spending behaviour used their cards at ATMs are now using their and participation of their transactions at ATMs cards with merchants, both online and at POS 100% 00% 56% 56% 29% 29% 8% 8% 7% 7% 86% 86% 7% 7% 5% 5% 52% 52% 31% 31% 9% 9% 7% 7% Cardholders deciles* 76% 76% 13% 13% 8% 8% 3% 3% 41% 41% 38% 38% 12% 12% 9% 9% 66% 66% 18% 18% 12% 12% 4% 4% 34% 34% 42% 42% 13% 13% 11% 11% 57% 57% 24% 24% 14% 14% 5% 5% 32% 32% 45% 45% 13% 13% 10% 10% 47% 47% 31% 31% 16% 16% 6% 6% 25% 25% 50% 50% 14% 14% 11% 11% 35% 35% 39% 39% 19% 19% 7% 7% 20% 20% 54% 54% 14% 14% 12% 12% 25% 25% 47% 47% 21% 21% 8% 8% 16% 16% 57% 57% 15% 15% 12% 12% 15% 15% 55% 55% 21% 21% 9% 9% 10% 10% 61% 61% 14% 14% 14% 14% 5% 5% 63% 63% 18% 18% 14% 14% 4% 4% 63% 63% 12% 12% 20% 20% % of Tx at POS (contactless) % of Tx at ATM % of Tx at POS (regular) % of Tx online 6 *Cardholder deciles on cards hosted by Network International in the UAE. The left hand chart shows cohorts of cardholders from January 2020, split by their spend behaviours and whether they used their cards mostly at ATMs, or with merchants. The right hand chart shows the same cohorts of cardholders, and how their behaviours have changed, in July
New business momentum has been maintained Merchant Solutions Issuer Solutions Luxury Fashion Group Dubai franchisees of Alexander McQueen New customer wins and Bvlgari partnerships Adidas Expanded mandates and cross sell of products 7
Online gateway merchant signings have increased, alongside growth in e-commerce payments Year-on-year growth in directly acquired e-commerce TPV 2 (excl. Government and airlines) 70% 60% 50% 40% Expect to see some reduction in H2 as consumers’ shopping habits normalise 30% 20% 10% 0% Jan Feb Mar Apr May Jun Jul c300 00 c1250 250 Total number of N-Genius TM gateway customers merchants merchants Notes: s: 2 2. . Growth in online TPV represents the increase in both TPV processed for existing merchants, as well as TPV processed for those merchants who are newly signed. Not all merchants who are 8 signed in July may yet be generating online TPV, as there is often a short time delay between signup and transactions occuring
Proposed acquisition of DPO will accelerate our growth Consolidates our presence in Africa, the most underpenetrated and fast growing payments market in the world • Africa expected to be c40% of Group revenue by 2024 Broadens our Merchant Solutions offering and strengthens our position across the payments value chain in Africa. • Africa segment expected to have balanced revenue across Merchant & Issuer Solutions by 2024 Widens our capabilities and exposure in fast growing online and mobile money • Expected to double our e-commerce exposure over time Combined capabilities and solutions provide significant cross-sell opportunities to our customers 9
DPO has a strong standalone growth profile, which combined with synergies, will deliver attractive returns Standalone Syne nergies ies Reven enue t e trajec ectory: Predominantly r revenue sy synergies Historical standalone revenue growth of c.40% (2017-2019 CAGR) 3 3 key a areas: s: Future revenue growth assumed to be marginally lower than that achieved historically + Cross-sell of acquiring capabilities to Prudent considering market growth potential 1 Network International’s existing Issuer and indication of Covid-19 driven acceleration Solutions Bank customers 1 Co Cost st b base se well-inves ested ed: 2 Improve transaction acceptance rates Established presence across the continent: local sales forces, local offices and license infrastructure Cross-sell Network International’s POS 3 and mPOS solutions into DPO’s Integrated their technology platforms with the 2 customer base relevant acquiring banks and MNOs 3 Cl Clear p path t to profitability: High h contribution m margin o on incremental r revenue Well-invested business with high fixed cost base syner ergies es demonstrating strong operating leverage Expected to deliver c.30% EBITDA margin within 3 - 4 years Under nderpins d s del eliver very o of d doub uble e digi git t ROCE w E within 3 3-4 yea years 10
Financial Review Rohit Malhotra, CFO 11
Merchant Solutions performance reflects lockdown measures Total Processed Volume (TPV) (USDbn) 1 Revenue (USDm) (26.1)% (25.7)% 69.1 21.5 51.1 16.0 H1 2019 H1 2020 H1 2019 H1 2020 • Merchant Solutions largely focused on direct acquiring markets of the UAE and Jordan • Performance closely linked to lockdown measures and related reduction in consumer spending • Refunds and chargebacks remain within expected levels, with no significant increases Not otes: 1 1. For definitions of Alternative Performance Measures and Key Performance Indicators, see pages 27-28 12
All merchant sectors showing recent recovery Year-on-year growth in directly acquired TPV 1 60% 40% 20% 0% Jan Feb Mar Apr May Jun Jul -20% -40% -60% -80% -100% Group Direct Acquiring Of which Supermarkets Of which Retail Of which travel & entertainment Of which other (Government, Healthcare, Education, Other) Not otes: 1 1. For definitions of Alternative Performance Measures and Key Performance Indicators, see pages 27-28 13
Domestic spending has shown a strong recovery whilst international / tourist spending is still low as expected Year-on-year growth on domestic vs international cards in directly acquired TPV 1 20% 0% Jan Feb Mar Apr May Jun Jul -20% -40% -60% In 2019: international -80% volumes 20-25% participation of directly acquired TPV -100% Domestic volumes International volumes Not otes: 1 1. For definitions of Alternative Performance Measures and Key Performance Indicators, see pages 27-28 14
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